Perils of Using OLS to Estimate Multimedia Communications Effects

Prasad A. Naik
University of California

Don E. Schultz
Northwestern University

Shuba Srinivasan
University of California


1. INTRODUCTION

Companies invest millions of dollars every year in various forms of marketing communications to influence customers and prospects to buy products and services. For example, General Motors spent over $2.8 billion last year to promote its lines of automobiles. Brand managers, senior management, and shareholders therefore have an interest in knowing whether or not their media advertising had any marketplace effects. Moreover, managers would like to know what combination of media were the most effective to plan future promotional campaigns. To this end, marketing and advertising communities have developed "metrics" that provide market feedback on various measures such as consumer awareness, attitudes, and purchases. Indeed, the metrics related to marketing and marketing communications appear to be the Holy Grail for most marketing managers (see, e.g., Ambler, 2000).